Bank guarantees are independent contracts and can only be restrained from invocation in cases of fraud or special equities, which were not established in this case.

ORDER :

Mr. Pankaj Bhandari, J. - Applicant - M/s. Continental Engineering Corporation has filed this Application under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the Act') with a prayer for restraining the non-applicant/respondent - M/s. Jaipur Metro Rail Corporation Limited from invoking the bank guarantee. During the pendency of the application under Section 9 of the Act, the applicant filed an SLP before the Apex Court bearing Special Leave Petition (Civil) Diary No.47858/2023, which was decided by the Apex Court on 20.11.2023 and following order was passed:

"9. We accordingly pass the following order:

(i) The Single Judge of the High Court is requested to take up the application under Section 9, namely, SB Arbitration Application No. 130 of 2023 on 22 November 2023;

(ii) Both the parties have agreed to the above course of action and state that they will cooperate in the hearing of the application for the grant of injunctive relief;

(iii) Till the High Court takes up the application for ad interim relief on 22 November, 2023, and bearing in mind that there was a protection in operation of guarantees till 17 November 2023, we extend the protection as indicated in (iv) below;

(iv) Since the first respondent has in the meantime invoked the bank guarantees, the proceedings of the bank guarantees shall not be encashed till 22 November, 2023, subject to such further directions as may be issued by the High Court after hearing the parties.

10. All rights and contentions of the parties are kept open. This Court has not entered any finding on the merits of the rival contentions."

2. Preliminary objection as to the maintainability of the application under Section 9 of the Act is raised by Mr. R.P. Singh, Senior Advocate, assisted by Mr. Sandeep Pathak, Advocate, appearing for respondent/non-applicant on the ground that the applicant has already approached the International Chamber of Commerce ("ICC") under Article 29 of ICC Arbitration Rules seeking mandatory relief for release of Bank Guarantee without having asked for interim relief for restraining invocation of Bank Guarantee, which could have been asked under Article 29 of the ICC Arbitration Rules, 2021, applicable in the matter of International Commercial Arbitration, to which, Mr. Gopal Jain, Senior Advocate, assisted by Mr. Samudra Sarangi has serious objection and contends that before the Apex Court, both the parties agreed to the hearing of the application under Section 9 of the Act and also agreed before the Apex Court that they will cooperate in the hearing of the application for grant of injunctive relief and as such, preliminary objection to this effect cannot be raised by the non-applicant.

3. In counter, Mr. R.P. Singh, Senior Advocate, contends that in Para 10 of the order passed by the Apex Court, it was clearly mentioned that all rights and contentions of the parties are kept open and that the Apex Court has not entered any finding on the merits of the rival contentions. Thus, the non-applicant is entitled to raise any objection. Court will be dealing with the above objection in the later part of this order.

4. Succinctly stated the facts of the case are that in 2013, applicant was awarded the works for carrying out design and construction of Tunnel (Contract) between Chandpole and Badi Chauper and reversal line by Shield TBM and construction of Underground Metro Stations at Choti Chauper and Badi Chauper to the non-applicant by Cut & Cover Method on East-West Corridor of non-applicant's project. The bid was accepted in favour of the applicant and a letter of acceptance was issued on 09.09.2013 for a value of INR 507,36,81,960/- only with a stipulated time for completion of 36 months from the date of commencement. The applicant submitted Performance Security and Retention Bank Guarantee, the details of which, are as under:-